The
petrochemical industry is intimately associated with our daily lives
Petrochemical products are around in practically every aspect of our
lives; things we see and use everyday, such as toothbrush, towel, food
container, clothes, building materials, decorative materials, transportation
vehicles and amusement machines, have petrochemical components in them. One
example can depict the importance of petrochemical industry in its application
to the apparel industry. A synthetic fiber factory with an annual output of
90,000 tons only occupies an area of 5,000 square meters (roughly the size of
a soccer field). But to produce an equal amount of wool requires a pastureland
as big as 40,000 square kilometers (bigger than the total area of Taiwan).
Based on Taiwan's output of synthetic fibers in 2002 at 3.0 million tons, we
need an area 37 times as big as Taiwan in order to produce the same amount of
wool. Intimately associated with our lives, petrochemical industry not only
provides us with comfort and high-quality living, it is also an indispensable
industry to the development of economy and technology civilization.
Petrochemical
industry and economic development
Petrochemical industry has had a significant impact on Taiwan's
economic development. Its related sectors cover a wide variety of products,
ranging from chemical fertilizer, pesticide, detergent, apparel, plastics,
rubber to paint. The total output of Taiwan's petrochemical industry amounted
to US$58.9 billion in 2003, accounting for 27% of that of the manufacturing
industry and topping other sectors in terms of breadth and depth of influence.
In the past few years, petrochemical-related products have been widely applied
to high technology in the fields of electronics and aerospace, making immense
contribution to the transformation and upgrade of Taiwan's industry. Thus,
petrochemical industry is regarded as the locomotive to our national economic
development.
Cherishing
the limited resources and maximizing their effects
After the world has been through two energy crises, oil is
considered one of the most precious resources in the world. With known crude
oil reserves in the world at approximately 1 trillion barrels, it will last
only forty some years based on the current consumption rate of 65 million
barrels per day. That means, the world's oil resources will be depleted in
less than half a century. Therefore, almost every country is vigorously
seeking alternative energy resources. It is anticipated that by the beginning
of the 21st century, oil will be replaced by other forms of energy, except for
aviation fuel. Even gasoline for automobiles might become obsolete. By then,
petroleum will be used mainly for the production of petrochemical products and
become indispensable from another perspective. The importance of petrochemical
industry can be discerned from the fact that advanced nations in Europe,
United States and Japan are actively expanding related facilities.
Petrochemical industry is not an energy-consuming, low-efficiency industry. On
the contrary, for a country like Taiwan that is scarce in land and densely
populated, it is a vital industry that is essential for creating economic
prosperity and elevating living standard.
Characteristics
of Taiwan's petrochemical industry and its underlying problems
Taiwan's petrochemical industry was
developed in a reverse direction from bottom up into an integrated system with
upper, middle and down streams intimately linked. Such a system, having
achieved considerable scale in a few decades, is unique in the world and has
aided the flourishing development of the domestic economy.
However, with no way to expand upstream production of basic
petrochemical materials, a supply shortage developed over the long term
affecting the manufacturing and sales of mid- and downstream businesses and
forcing them to rely heavily on imports. When international demand for
petrochemical products tightens, domestic manufacturers have been compelled to
spend more on material costs and this cut into their competitive edge in the
international market.
Many countries, be it in Europe, North America
or East Asia, have been expanding their production capacity for upstream
petrochemical products in recent years. Take the instance of South Korea.
Their ethylene production capacity was only 500,000 tons in 1987, far below
Taiwan's 820,000 tons. But by 2004, South Korea's ethylene capacity had
expanded to 5.73 million tons, far exceeding Taiwan's capacity of 2.715
million tons (actual output in 2003 was 2.679 million tons, while domestic
demands totaled 2.919 million tons). Taiwan's current self-sufficiency rate
for petrochemical raw materials of 91.7% is still too low. Taiwan must
continue to expand capacity, otherwise the development of the petrochemical
industry will be retarded, and the growth rates of other related industries
will slow in tandem.
The
inception of the No.6 Naphtha Cracking Project and its final settlement in
Mailiao
In view of the long-term shortage of basic petrochemical materials in
Taiwan that dampened development of the midstream and downstream petrochemical
industries, Formosa Plastics Group proposed the Sixth Naphtha Cracking Project
for alleviating the problem and acquired government approval in 1986. The
first selection for the project site was a 280-hectare property in Lizi, Yi-Lan.
Due to subsequent irrational objections of local opposition, the project was
moved to Guanyin, Taoyuan in 1988, and then aborted for similar reasons.
In 1991, with blessings of both the local government and the residents,
the project chose to settle down in the off-shore industrial zones in Yunlin
County of Mailiao and Haifong, by way of reclamation, for building up an oil
refinery plant with annual capacity of 21 million tons of crude oil, naphtha
cracking plants for producing 1.35 million tons ethylene per annum, and other
petrochemical plants, heavy machinery plants, a co-generation plant, and the
Mailiao Industrial Harbor. In addition, in view of the serious power shortage
in Taiwan, which impacts greatly on people's lives as well as on businesses, a
thermal power plant with a capacity of 3 million kilowatts was therefore
planned; a portion of the generated power will be incorporated into the TPC
power supply system, for assisting relief of the domestic power shortage
Total investment of stage one and stage two of the Sixth Naphtha
Cracking Project (including the industrial harbor and the power plant) amounts
to US$13.6 billion. Plant facilities have been successively completed for
production in mid 2001. The annual output value of the fully completed
facility is estimated at US$14.1 billion. Investment in the Phase Three
expansion launched in 2002, estimated to be US$1.32 billion, together with
investment for the fourth expansion of US$ 4.27 billion in 2004, the grand
total of the four phases of the Sixth Naphtha Cracking Project is as high as
US$19.2 billion.
Land reclamation
The Mailiao and Haifong Zones that accommodate
No.6 Cracking Project are situated at the estuary of Chuoshui Creek at the
northern end of Yunlin County. Approximately 8 km long from south to north,
the area extends more than 4 km along the coastline out toward the sea. A
great portion of the land lies below sea level most of the time and one can
observe some sandy land at low tide which is totally submerged during high
tide. The Cracking Project required massive land reclamation efforts to create
2,096 hectares of new land. Since the two sections have a waterway segregating
them from the fish farms along the coast, geological improvement to shore up
the foundation was required before the plants could be built. Land reclamation
was carried out by first constructing an embankment with rock caisson and
other materials that encircles the designated project site, then sand was
extracted from government-sanctioned waters to level up the area inside the
embankment. Mailiao is located in a region that is commonly dubbed "head
of the windstorm and end of the waterflow," with the northeast monsoon
blowing half of the year. Inconvenient transportation and poor weather made
the reclamation work doubly formidable. It is truly a giant undertaking to
turn sea into mulberry fields.
No. 6 Naphtha Cracking Project- magnitude and facilities
(1) Construction projects:
(2)Mailiao Port
Mailiao
Port in the project occupies an area of 476 hectares, comparable to the size
of Taichung Port (487 ha) and more spacious than Keelung Port (384 ha). With
water level 24 meters deep during mid-tide, the Port can accommodate vessels
of 260,000 tonnage. It will become Taiwan's deepest port and the first
privately funded industrial port. Upon completion, the Port can handle up to
60 million tons of cargo a year in the preliminary stage, second only to
Kaohsiung Harbor. Although Mailiao Port will be used for industrial purpose
only, its operations in Yunlin County will incorporate the vast area of
hinterland in the vicinity into the port zone. Consequently, the convenient
marine transportation will promote the development of local industry.
(3)Independent power
plant
The
project plans to install a large thermal power plant equipped with four sets
of generating units that will each generate 600,000 kW of electricity. The
combined output of the three completed sets of generators is 1.8 million kW.
Since they officially started production in June 1999, September 1999 and
September 2000, all energy generated has been sold to Taiwan Power Company and
incorporated into the national power grid (Taipower's total capacity in 2003,
including that from IPPs, came to 33.30 million kW). This contribution has
gone a long way to easing Taiwan's power shortage.
(4)Oil refinery
The oil
refinery will process 21 million tons of crude oil each year at 450,000
barrels a day (Chinese Petroleum processes 770,000 barrels of oil each day in
total at its refineries in Kaohsiung, Taoyuan and Ta-lin-pu after fifty years
of development). Upon completion, the refinery will produce 3,840,000 tons of
naphtha that will be furnished exclusively to all project-related plants.
(5)Naphtha cracking
plant
Two
naphtha cracking plants have a combined annual output capacity of 1.6 million
tons of ethylene (700,000 tons from OL-1 and 900,000 tons from OL-2) in
comparison with the annual capacity of 1.02 million tons of Chinese Petroleum.
(6)Co-generation
plant
The plant
will generate electricity, steam, water for industrial use, hyperpure water,
nitrogen, oxygen and compressed air for use by project-related plants. The
plant currently has 13 generator sets installed, with a total capacity of 2.72
million kW. The excess electricity produced, after supplying manufacturing
needs, is sold to Taiwan Power Company.
(7)Machinery Shop and Boiler
Shop
The machinery shop primarily engages in the
design, manufacture and installation of petrochemical process equipment
(reactor, tower, pressure containers, earth covered tank etc.). Manufacturing
capability exceeds 10 meters in diameter, 100 meters in length and 1,000 tons
in weight (10Mx100MLx1,000MT). The boiler shop is mainly engaged in the
planning, design, manufacture, installation and construction of the 50-150 MW
co-generation power plant and the 600 MW independent power plant.
(8)Wafer fabrication plant
This
wafer plant is a joint venture of Formosa Plastics, Asia-Pacific Investment
and Komatsu Electronics of Japan for the production of 8-inch wafers with an
annual output of 3.24 million pcs. The investment totals NT$9.6 billion. Work
was completed in March 1999. The plant obtained ISO 9001 certification in
December 2002, was awarded ISO 14001 in March 2001 and QS9000 in March 2003.；the
12-inch wafers with an annual output of 1.2 million pcs plant is undertaking.
(9)Formosa Asahi Spandex
Co. Ltd.
Formosa Asahi Spandex Co. is a
NT$2.8 billion joint venture of Formosa Plastics and Asahi Kasei. The plant's
annual production capacity is 5,000 tons per year. The Phase 1 project, with
2,500 MT capacity, was completed in the third quarter of 2000. The 2,500 MT
phase 2 project was completed in March 2002 and obtained ISO 14001
certification in September 2002. An expansion project allowing annual
production of 10,000 MT polytetramethylene glycol (PTMG) was completed in
September 2002.
(10)
Formosa Plasma Display Corp.
The Plasma Display Plant is built under the joint venture of
Formosa Plastics and Fujitsu Hitachi Plasma Display Limited. The Phase 1
investment is NT$6.3 billion. Annual capacity: 120,000 units. Mass production
started in September 2003; acquired ISO 9001 in May 2004; the expansion of the
Phase 2 plant is also under planning.
Environmental
Protection Plan in the No.6 Naphtha Cracking Project
Since its establishment,
Formosa Plastics Group has consistently acted in concurrence with government
policies toward the common goal of creating a prosperous society. In the many
years of pursuing after economic growth, we have persisted in the belief of
"equal emphasis on environmental protection and the economy" and
worked relentlessly in the area of pollution control and environmental
preservation.
Prior to the initiation of
the No. 6 Cracking Project, we retained the services of prestigious
universities in the country and engineering consulting firms from advanced
nations to conduct simulation studies and propose preventive measures with the
very intent to minimize the impact of the project on the environment. Based on
the analyses and proposals of these experts, an environmental impact study was
prepared and subjected to EPA review by scholars and experts at home and
abroad before the project got underway. An environmental monitoring agency
will be in charge of follow-up and post-operational review to ensure full
compliance to relevant environmental requirements.
In this project, US$3.82
billion or 20% of the total investment is spent on pollution prevention by
adopting and procuring the most advanced industrial pollution control know-how
and facilities. Based on the premises of making parallel strides in industrial
development and environmental protection, the goal of Formosa Plastics is to
create an international-caliber industrial park. With our own aspirations and
experience accumulated over the years, we are confident that the task of
preserving our environment in the midst of all these undertakings will be well
done.
Feedback
to the local community
Presently, all
offshore industrial zones are poverty-stricken areas that lack medical,
cultural or recreational facilities. In addition, Central Taiwan faces the
greatest lack of medical facilities; Taiwan also lacks comprehensive planning
of recreational facilities. Furthermore, the proportion of senior citizens has
now risen to 9%, evidence of the gradual ageing of the population. As National
Health Insurance has now been implemented, public demands for medical care
have also increased, so there is a need to set up medical facilities to raise
quality of life.
The goal of economic development is to let citizens enjoy
a higher quality of life. Achieving this requires attention to non-economic
aspects of life (such as health, transportation, environment, leisure, culture
and welfare). In recent years, Taiwan's economic development has borne fruit
and the government has invested in the basic non-economic resources of
society, such as transport infrastructure construction, healthcare, and
recreational and cultural facilities.
In light of this, and spurred by the desire to make a
contribution to society and the local community, Formosa Plastics Group is
confident that it can build a model industrial park in Yunlin's offshore zones
that embraces the functions of industrial operations, environmental
protection, medical care, recreation and culture.
The planning includes a medical
center caliber hospital, a senior-citizen community, a nursing institute and a
recreational park. The availability of these facilities will elevate the
living standard of local residents and, by tying the industrial park closely
with people's lives, create a fresh image for the park.
A
new town in Mailiao
In anticipation that the No. 6
Cracking Project will drive the local economy and advance the living standard
of the residents, Yunlin County government initiated a 3,000-hectare new town
development plan in Mailiao. Having won the approval of the Executive Yuan,
the plan encompasses a light industrial zone, a residential area and a
commercial area.
Formosa Plastics Group will coordinate with the plan
by bringing in more downstream manufacturing industries. Linking the up-,
middle- and downstream productions can best utilize the resources of the
industrial park, shorten distances for material and product transport and
lower the costs of packaging and storage. Also, geographic proximity that
invites intimate exchange of technical know-how can achieve the goal of
division of labor. Such system will reduce production costs, and ultimately,
enhance international competitiveness.
The development of the Mailiao new town can create
more jobs and draw local residents away from the trade of fish-farming that
has created severe a subsidence problem due to massive extraction of
underground water. The area will also be transformed from an
agriculture-dependent area into a farming-industrial city. This will not only
raise the living standards of local residents and employees in the new town,
it will drive forward the development of industry. In all, the development
conforms to the objectives of government policy of "elevating personal
income, "fostering industrial potential," "promoting balanced
regional development" and "enhancing living quality."
Projected economic
contributions
Total investment in the No. 6
Cracking Project amounts to US$19.2 billion which is translated into an annual
investment of NT$80 billion during its construction phase or 9% growth rate of
private investment and 1% of national economic growth.
When complete, the contributions of the No. 6 Cracker to
the country will be multiple. It will boost the confidence of the private
sector, stabilize development of the petrochemical industry, promote upgrade
of the petrochemical industry and balanced regional development, and shorten
the gap between city and countryside. Other materialized benefits of the
project include:
Enabling an increase in Taiwan's self-sufficiency rate for ethylene from 38% in 1994 to 91.7%.
Annual output increased by US$21.26 billion, a 7.5% rise in GDP.
Annual import-substitution value of around US$1.88 billion with stimulus to the development of middle and down stream industries increasing output by a further US$58.9 billion as a result.
Boosting government tax revenues by over US$0.74 billion each year.
Mailiao Port's significant contribution to facilitating commercial transportation and promoting local development.
Independent power plants able to ease national energy supply shortfall.
2,601 hectares of new land created by reclamation.
Outlook for the future
In its more than four decades of
operations, Formosa Plastics Group, approaching everything with the attitude
of "seeking perfection," has been adhering to the spirit of
"diligence and simplicity" and the goal of developing
manufacturing industry to make a contribution to the national economy.
Taiwan is an island country characterized by scarce resources and a small
domestic market. Most products must rely on export. Only by observing the
traditional virtue of industriousness and persistently seeking the
development of manufacturing industry can the country maintain its economic
growth. That is why Formosa Plastics Group has surmounted towering obstacles
to push for the No. 6 Naphtha Cracking Project. Thanks to assistance and
support from all sectors, we will put forth all our efforts to complete this
gigantic undertaking and establish a new milestone for the economic
development of the country. We beseech your continuing support and advice.
Let us work together to create a better tomorrow.
The
investment of FPC in the Sixth Naphtha Cracker Project
|
Type of Factory |
Product |
Capacity (10,000MT) |
|
C4 plant |
Butene-1 |
3.0 |
|
C4 plant |
MTBE |
17.4 |
|
Epichlorohydrin plant |
ECH |
10.0 |
|
Methyl Methacrylate plant |
MMA |
9.8 |
|
HDPE plant |
HDPE |
35.0 |
|
LLDPE plant |
LLDPE |
26.4 |
|
VCM plant |
VCM |
80.0 |
|
Caustic Soda plant |
Caustic Soda |
117.0 |
|
PVC plant |
PVC Resins |
49.4 |
|
Acrylic Acid & Ester plant |
AA/AE |
10.8/11.8 |
|
EVA plant |
EVA/LDPE |
24.0 |
|
Acrylonitrile plant |
Acrylonitrile |
28.0 |
|
Carbon Fiber plant |
Carbon Fiber |
0.3 |
